You might be on the lookout for exposure to the commercial real estate market as an investor. You will indeed find a wide range of options that meet the time horizon and individual risk tolerance. For example, an investor with high liquid and short term opportunities might prefer publicly traded securities. Well, many invest in triple net lease properties to hold stable cash flow and be little involved with the property’s daily operations. When it comes to real estate investment or a triple net lease, a considerable addition to the portfolio is the CVS for sale. But what exactly is the triple net lease? Are there any benefits of this lease? You can get all your answers to the questions mentioned above.
What is the triple net lease?
The triple net lease is also known as NNN or triple N. In this lease, and it is the tenant’s responsibility to pay not only the rent but also the remaining expenses of the property. Some expenses include maintenance, real estate taxes and building insurance. When it comes to the standard lease agreements, the landlord pays a few or all of these expenses. After all, it is the landlord’s responsibility. But that’s not the case with triple N. The investor can attain advantages like low rent with the triple net lease. Landlords providing low rent have a vacant building and easily gain tenants for the property.
What are the benefits of a triple net lease?
The triple net lease is popular amongst many landlords or investors. There are reasons for it. To know the advantages, you can continue reading this article.
- It helps provide tax benefits to tenants, making the search easier: You don’t have to pay taxes compared to a standard property lease. But with the triple net lease, it is necessary to pay them. Since the tenants’ responsibility is to make the property tax payments, they can build a few of these expenses into their business expenses. As a result, the tenants will attain tax benefits for the business. Hence, you can ensure that the investors or landlords don’t have to worry about finding a tenant.
- It helps the property owners or investors to pursue other investments: Pursuing other investments can be challenging, especially when you have to pay all the property taxes and other expenses. So, thanks to the triple net lease, the tenants make such payments. When tenants pay the property operating expenses, little day-to-day management is required by the property owners. Hence, it will enable them to pursue different investments or other interests.
- It allows the investor or the property owner to attain a consistent stream of income: With the help of the triple net lease, you can ensure a considerable stream of income. For instance, you purchase a property such as CVS for sale. The lease structure for tenants includes a standard amount of rent, which must be paid every month over a prolonged period. Additionally, in case of any catastrophes or unknowns, the tenant will also have to make payments for those expenses. In this manner, it helps protect the risk of investments from property owners.
- It is profitable to the owners because of lease escalations: Several triple net leases comprise lease escalations. But what exactly is the lease escalation? Lease escalation is defined as an obligated lease or rental increase at regular intervals. For instance, the owner or investor can mandate a 1 percent or 5 percent increase in the rent every five years. Apart from the lease escalations, the tenant’s payment of other expenses allows the property owner to profit from the property.